Debunking a few myths about India's spate of corruption scandals
Two great powers are about to change their governments. In both China and America, questions of employment, growth, foreign policy, and individual background dominate the discussion. In neither decision does “corruption” figure as an issue, as it supposedly does here.
Why should it, you ask. After all, are we not told that India is unique in the scale of its corruption? That India is more corrupt than it has ever been? That the scale and nature of corruption is what angers us? And finally, that corruption is a matter of erring individuals, especially at the top of our power structure?
Unfortunately, none of these things is true. This country is being held hostage to false definitions and by false diagnoses.
Let’s start with the basics. What is political corruption? Is it the use of political or administrative power to enrich yourself? Almost: it is the use of power to enrich yourself illegitimately. We need to know that the enrichment, or the use of power, is unlawful, or a distortion of the system as designed. Outright bribery is illegal. So is the sort of falsification of records that powered the fodder scam in Bihar, or the depredations of Boss Tweed in nineteenth-century New York. But is that the sort of “corruption” we’re discussing today? When your laws and regulations allow for, indeed demand, an excess of cronyism, where will you find saints with which to stack your entire political system?
Is the US any less corrupt than India? Powerful legislators or regulators can earn giant fees, within moments of losing office, as consultants or lobbyists for the companies they just supervised. Government contracts and tenders can be bent, perfectly legally, to favour one or another corporation.
Take one simple comparison: we’re making a fuss about the giveaway of spectrum. But you’ll search the American media in vain for agitation about Washington’s giveaway of spectrum worth tens of billions of dollars to various big corporations — cunningly tucked away in legislation sponsored by the White House this year to extend tax cuts on the middle class.
Not convinced? Take another simple comparison: our paroxysm of righteous indignation about coal mining licences. The United States Bureau of Land Management administers vast coal-rich tracts. It supposedly hands mining leases out through auctions — but, in fact, only 15 per cent of those “auctions” since 1991 have had more than one, usually politically connected, bidder. In one recent auction, the “winner” bid just over 10 per cent of the spot price for coal locally, and just under one per cent of the price of coal in China. Overall, independent estimates suggest the US Treasury has again foregone tens of billions in actual revenue from coal leases in the past decades. Political issue? People calling for Barack Obama’s head for “presiding over the loot of coal despite being personally honest?” Nope. Oh, those wimpy Americans.
Still not convinced? OK, here’s yet another. We’re concerned that Nitin Gadkari administered contracts to a company that later funded his own enterprises. Ever heard of Countrywide Financial? During the real estate boom, it handed out vastly disproportionate numbers of heavily discounted loans to US lawmakers and employees of the US’ public sector housing finance company. Meanwhile, Countrywide received and retained a monopoly over selling privately financed mortgages on to the public sector. Anyone fired or prosecuted? No. A legislative ethics committee investigation went nowhere.
In each of these cases, do you really think our public discourse more mature? Spectrum giveaways to incumbents are justified in the US on the basis of property rights and consumer value; it is not, per se, an invitation to corruption. In India, introducing such nuances would be, presumably, anti-national. That coal mining leases were handed out to connected firms is not considered the responsibility of the guy at the top. In India, saying that would mean you’ve been bought off, or are soft on power. That an unstated quid pro quo existed between firms and their public sector customers and lawmakers was considered a problem; but it was understood as impossible to prove or correct unless you took away the public sector’s right to hand out favours to firms. If Mr Gadkari tries making that point here, see the mob howl.
The United States is one of the most transparent nations on earth, and that has aided its voters’ understanding of these issues. Instead of calling people corrupt, they focus on the excessive influence of lobbying and political financing, and work to minimise it (to the extent their activist Supreme Court allows). They recognise the only way to reduce benefits flowing to political insiders is to open up the political system to outsiders. They recognise that, when they worry about windfall gains through policy, they are really talking about a structural inequality of economic power and political access favouring “the top one per cent”.
Am I being too kind to the Americans? They are notoriously laissez-faire, after all. Well, let’s look at the Chinese system then. In July, Bloomberg broke the news that incoming president Xi Jinping’s relatives had made fortunes in – wait for it – real estate, telecom and mining. Recently, The New York Times said that outgoing premier Wen Jiabao’s family had made $2.1 billion thanks to well-placed directorships and so on. These discoveries were made possible through a new corporate transparency law. Do you think that these men are somehow more corrupt than their predecessors? Yet we make that claim about our current political class. Do you think that we could perhaps learn that unearned benefits are greater in the dark, in an unreformed political and regulatory environment — and not as a product of increasing personal weakness or greed?
We won’t, not unless we realise that we’re suffering a national psychosis that has all the characteristics of what the sociologist Stanley Cohen called a “moral panic”. In such circumstances, talking openly of what lies at the centre of the issue becomes taboo, essentially because it seems you then support immorality.
The great, the good and the wise tell us India has a problem with corruption, when what they mean is that India has a problem with inequality, with reform, with transparency. This is more than misleading; it is wrong. In fact, it is more than wrong; it is dangerous. It suggests India has people that are corrupt, not institutions that are poorly designed.
Moral panics open up the door to what Professor Cohen called “moral entrepreneurs”, who swoop in self-righteously and make “folk devils” of everyone they can. In the process, the real causes of real problems are not just ignored, they are dismissed. Point out the flaws are the systems’, not necessarily individuals’, in such an atmosphere, and you will be ignored or attacked. Until we move beyond this – and the first step is for those who know better to stop calling every departure from the ideal “corruption” – building genuine institutional strength in India will be impossible.
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